Sale Of Goods, And The Applicability And Advantages Of The Uniform Commercial Code2 min read
In the United States, contract law is almost exclusively the domain of the States, ie. each individual state has its own contract law jurisprudence, and there would certainly be state specific contract law rules.
The United States has a fairly consistent and standardized commercial code for the sale of goods. All the states, except Louisiana have adopted the Uniform Commercial Code (the “UCC”) and this gives a generally predictable framework for contract formation and enforcement to traders and persons dealing in goods, with US counterparties.
Article 2 102 of the UCC, defines the scope of the applicability of the UCC. It governs all transactions where the subject matter is “goods”. The jurisprudence on contracts for the provision of services and sale of goods generally comes down to the “predominant purpose” test. The courts would look at the facts and circumstances to determine what the predominant purpose of the contract was. If the court found that the predominant purpose of the contract was the provision of services, the court would not apply the UCC, on the other hand if the court was to find that the predominant purpose was the supply of the goods, and the services were merely incidental, the court would apply the UCC. This is a sort of intuitive test, although in law it could get very detailed and could result in tediously long briefs by lawyers, it could very simply be explained thus; if you buy a ton of nails for $1000 and the contract provides for delivery to your doorstep – this contract would probably be one under the UCC, because you intended to buy the nails, and the delivery was merely incidental. But on the other hand, if you employed a carpenter to fix your door, and he used a couple of nails – that contract would be governed by the State specific contract law (and not the UCC) because the intention was to engage the services of the carpenter to fix the door, and the nails used by the carpenter were merely incidental to that purpose.
The advantages of using the UCC are many, it provides an advanced and sophisticated mechanism to enforce contracts and a fairly consistent set of cases across State lines for the parties to be able to judge the merits of their claims.
If you have a contract for the provision of services or one governed by the UCC, and are contemplating a dispute with your counterparty, this article is a very rudimentary outline on the UCC, and you should not rely on it for making a legal decision.